A preliminary title report for Desert Ridge Homes, also referred to as an encumbrance report or as a “prelim” by finance professionals, is a document prepared on real property once an escrow is opened, but prior to closing. It is basically all of the essential information garnered from the property records where the property is located. Most residential mortgage lenders require borrowers to purchase lender’s title insurance coverage. The preliminary report is thereby used as a baseline in which a title insurance company will issue a title insurance policy. It reveals title defects and other matters which must be dealt with in order for a seller to convey clear and marketable title. Some of the pertinent information covered by a prelim report is the legal interest in the Arcadia property to be covered, the legal owner of the property to be insured under said policy, the legal description of the parcel of land to be sold in the transaction and the exceptions, including judgments, encumbrances, claims and any liens. In addition, a preliminary title report should also contain a plat map which shows the property boundaries when the land was first subdivided. This map should be checked for any discrepancies between what was originally divided to what is currently observed. When a title company issues a preliminary title report, there is a finite amount of time granted to the seller to fix the problems before going ahead with the sale or to even cancel the agreement if something serious is detected. The buyer does have the right to to approve or object to the preliminary title report and cancel the deal unless the seller can provide clean title by prior to closing. Again, just as the seller has a limited time to correct any issues, the buyer also will only have a short period of time in which to act on the preliminary title report. So it is vital for both parties to carefully review the preliminary title report immediately upon receipt and to take the appropriate steps to correct any defects or exceptions listed. Remember, the preliminary title report will become the final title report on which title insurance is written. If you have any questions about the issued report or title insurance, it is strongly advisable to contact an experienced real estate attorney. A qualified real estate attorney can assist you with understanding the prelim report or any of the myriad of documents that will be needed to review prior to the purchase or sell of any property.
